Local Indian hot rolled coil (HRC) prices have remained stable at around INR 40,500/mt ($684/mt) ex-works during the past week, though amid dwindling volumes as current prices have been putting off buyers, traders said on Tuesday, June 10.
Two Mumbai-based traders said that at least two local steel mills have officially stated that local HRC prices will be maintained at current levels during June and any possibility of a downward price adjustment will be reviewed not before the end of July.
This has depressed sentiments in the markets as buyers have been reluctant to increase their bookings and inventories, as current prices are being resisted by the market with tepid demand, the traders added.
"Short-term HRC pricing strategy is on a fine balance currently. The appreciation of the Indian rupee against the dollar, which makes imports cheaper, should normally warrant a downward adjustment of around $20/mt. But, at the same time, there is shortage of domestic iron ore supplies and the largest domestic supplier NMDC had increased its prices by between seven percent and nine percent," a senior official at a local steel mill said.
"Also, production of several mills was low during April-March and therefore there is no urgency to lower prices. However, two steel mills JSW and Tata Steel are likely to increase production in June-July and a price adjustment could be considered factoring in higher supplies towards the end of June" he added.
Over the past one month, the India rupee has appreciated to about INR 58.50 from INR 60.50 against the dollar.
Market sources said that local HRC prices are expected to move sideways in the absence of any significant drivers to either prices or volumes.